Car insurance price index. The most comprehensive analysis of car insurance pricing in the UK

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1 Car insurance price index The most comprehensive analysis of car insurance pricing in the UK Quarter

2 Executive summary Car insurance prices U-turn for the first time in three years The Confused.com car insurance price index began in 2006 and is the most comprehensive analysis of car insurance pricing in the UK. Published every three months, it looks at more than six million car insurance quotes per quarter to provide insight and analysis across the market. The latest index, which covers the first three months of 2018, shows that UK drivers are now paying 768 on average for an annual car insurance policy. This is down 13, or 2%, over the past 12 months, a small win for drivers after facing a raft of price rises in recent years. Insurers seem to have softened prices as the Government announces a review of the Ogden Rate discount, expected in April 2019, which could mean insurers pay out less when drivers make a claim. The Government has also announced a reform to the way whiplash claims are calculated and paid, which may have also had an impact. The significance of these announcements can be seen within the last three months (Q1 2018) especially, as Confused.com s index reveals prices typically dropped by 59 (-7%). However, separate research by Confused.com reveals customers who renew with the same insurer are not benefitting from these savings. In fact, drivers who renewed their car insurance between January and March this year saw their premiums go up by 45 on average. With this in mind, Confused.com is urging drivers to shop around come renewal time to ensure they re getting the best deal available. Car insurance price index 2

3 The overall picture What were the major changes this time? Drivers celebrate an unexpected U-turn as average car insurance prices drop for the first time in three years Car insurance is now 13 cheaper than it was 12 months ago, a small win for drivers after facing a raft of price rises in recent years. That s according to the most comprehensive car insurance price index in the UK, which analyses more than six million quotes a quarter from Confused.com and is powered by Willis Towers Watson. However, the average comprehensive car insurance policy is still an eye-watering 768. And research reveals customers who renew with the same insurer are not benefitting from these savings. In fact, drivers who renewed their car insurance between January and March this year saw their premiums go up by 45 on average. And worryingly, 59% stayed with the same insurer rather than seeking out a better deal elsewhere. Insurers seem to have softened prices as the Government has announced a review of the Ogden Rate discount, expected in April 2019, which could mean insurers pay out less when drivers make a claim. The Government has also announced a reform to the way whiplash claims are calculated and paid which may have also had an impact. The significance of these announcements can be seen within the last three months (Q1 2018) especially, as Confused.com s index reveals prices dropped by a whopping 59 (-7%). Car insurance price index 3

4 The overall picture What were the major changes this time? However, we will have to see prices drop by 269 before drivers benefit from the rockbottom premiums of 2008 (Q2), when car insurance cost just 499 on average. In fact, prices are still 97 (+14%) more expensive than they were two years ago, and 261 (+52%) more expensive than they were 10 years ago. Car insurance price index 4

5 Price by age 17 year old drivers have seen the biggest price reductions Despite prices falling overall, certain age groups are bucking the downward trend. In fact, 68 year olds will be groaning as their premiums rise by 40 (+8%) since last year. However, they are only paying significantly less than the national average. 21 year olds also saw a sharp increase, with their premiums going up 38 (+2%) per policy to 1,621. But it s 18 year olds who are currently paying the most for their car insurance, as they face bills of an eye-watering 2,114 on average. Of any age, 17 year old drivers are celebrating the biggest price reductions and are paying 118 (-6%) less than they were last year, and 201 (-9%) less than drivers of this age bracket who took out a policy three months ago. Yet, the average car insurance policy for a 17 year old driver is still a whopping 2,003, making it crucial for them to shop around when it comes to renewal. As ever, male drivers aged between 17 and 20 are still paying the most of any demographic - 2,348 on average, compared to the 1,699 paid by their female counterparts. While female drivers aged between 61 and 65 are paying the least and less than half the national average, with a bill of just 363. Car insurance price index 5

6 Price by region What s going on regionally? Looking to the regions, motorists in Scotland will be driven to shopping around for better deals as their premiums buck the downward trend and they face another swathe of annual price increases. Motorists in the Scottish Borders have seen an increase of 32 (+6%) since last year, now paying 579. Outside of Scotland, motorists living in Central and North Wales saw the second biggest price rises, with avergae premiums up by 10 (+2%) to 629. However drivers living in Inner London are celebrating the biggest price reduction, making savings of 81 (-6%) since last year and 104 (-8%) less than those buying car insurance three months ago. While drivers living within Inner London are enjoying these cost decreases, they are the only motorists who can expect to pay over 1,000 for car insurance, on average. On a more local level, despite the recent price rises, all areas of the UK are paying more than they were two years ago. Drivers living in the Scottish burgh of Galashiels saw their premiums go up the most since last year, reflecting a price rise of 52 (+10%) to 577 on average. Car insurance price index 6

7 Price by region What s going on regionally? Yet the Hebrides is the only area to see car insurance costs go up over the last three months a rise of 1% equivalent to 7, bringing the average premium for this area to a pricey 724. And while there has been some respite for drivers in East London with car insurance dipping by 154 (-10%) since last year, they are still paying the most for car insurance of any area in the UK. Motorists from this area are paying 1,360 on average a huge incentive for them to hunt around for the best deal. Car insurance price index 7

8 Price by gender Battle of the sexes Despite recent price drops, some drivers are facing more expensive car insurance costs than others particularly male motorists. Men are paying 95 more than women, although the gap has closed somewhat since the previous quarter when it was 114. Insurers are unable to assess a driver based on their sex, as outlined by the EU gender directive, but there are other risk factors which cause men to have higher premiums. For example, men tend to drive more expensive cars with larger engines, on average, so they make higher-value claims. They also tend to have significantly more motoring convictions than women. Car insurance price index 8

9 Expert view Louise O Shea, CEO at Confused.com, says: Finally drivers have had some good news with the end of rising car insurance costs in sight. However, it s clear that many motorists are not seeing these savings reflected in their renewal letters, so it s more important than ever to shop around if they want to get a better deal. Being loyal doesn t always pay, so to get the message across to cost-burdened drivers the team and I are guaranteeing to beat the price insurers are charging at point of renewal. If we can t beat it, we ll give you the difference, plus 20. Please take a few minutes to check your letter and get a new price from Confused.com. We could easily save you almost 300*. Car insurance price index 9

10 Note to editors *Based on online independent research by Consumer Intelligence during March 2018, 50% of car insurance customers could save 289. More than six million quotes are used in the construction of each quarter s insurance price index - this makes it the most comprehensive insurance index in the UK. Unless otherwise stated all prices referred to are for comprehensive cover. Media information: Confused.com press office: PRTeam@confused.com About the Index: The index is compiled using anonymous data from all enquiries submitted on Confused.com. In line with the draft Office of Fair Trading (OFT) commitments on the use of competitor price data, the prices used for calculating the index are based on an average of the best five quotes received on Confused.com. The OFT closed on the 1st April 2014 and the commitments are now governed by the Competition and Markets Authority (CMA). Confused.com, a trading name of Inspop.com Limited, which is a company registered in England and Wales (Registration No ) at Greyfriars House, Greyfriars Road, Cardiff, CF10 3AL. Inspop.com Limited is an independent, wholly owned subsidiary of Admiral Group plc. We are authorised and regulated by the Financial Conduct Authority (FCA). Car insurance price index 10